Diamonds and Dogs
US Government Gets Paid BackUS Government Gets Paid Back
This week the big news was the IPO of the "new" GM which became the largest IPO in history as it was priced after the close on the 17th. "Old" GM shareholders and bondholders can be allowed to be disgusted by this turn of events and fanfare. With disregard to business law, the government and unions were put ahead of bondholders as they were the preferred benefactors of the ultimate bankruptcy and re-issued shares of this old line company. With shades of Russia, ownership was taken from some and given to those in political power. As the administration talked about the success of the offering, we can't forget that unlike any other bankruptcy, $48 billion in loss carryovers will be honored by the government. What this means to shareholders is that the "new" GM has been scrubbed clean of debts and has losses to buffer any taxes in the years ahead. The stock is a buy for that reason. For those with a conscience, well that is a different story.
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